Wednesday, October 26, 2011

Ben Davies' GATA 2011 Speech

Ben Davies has made his GATA 2011 speech available at Hinde Capital.
It is literally one of the most brilliant speeches with the focus on gold that The Doc has ever read.
Davies applies quantum physics, ocular occurrences called saccades, psychology, and Benford's law to gold (which gives Davies his $2,000 year end target for gold).
A MUST READ for any lover of gold and the sciences.

Benford's Law predicts Gold?
Benford’s law is a logarithmic function; thus any data set that involves constant rates of growth should follow the law. The Dow Jones or gold would be an example.
"If we think of the Gold price as 1,000, our first digit would be 1.
"To get to Gold with a first digit of 2, the price must increase to 2,000, and getting from 1,000 to 2,000 is a 100 percent increase.
"Let's say that Gold goes up at a rate of about 20 percent a year. That means that it would take five years to get from 1 to 2 as a first digit, forgetting compounding.”
"But suppose we start with a first digit 5. It only requires a 20 percent increase to get from 5,000 to 6,000, and that is achieved in one year.
"When Gold reaches 9,000, it takes only an 11 percent increase and just seven months to reach the 10,000 mark, which starts with the number 1. At that point you start over with the first digit a 1, once again. Once again, you must double the number -- 10,000 -- to 20,000 before reaching 2 as the first digit.
"As you can see, the number 1 predominates at every step of the progression, as it does in logarithmic sequences."
"If gold spent 1.5 year trading between 1100 and 1400 that is where approx 60% of occurrences are - remember 1 occurs 30.1% of time, 2 - 17.6% and 3 - 12.5%. So it follows that the next 40% of occurrences from 1400 to 1900 will take under 10 months"
So if that 1.5 yrs was from Sept 09 to Apr 11, then we should be converging on $2,000 sometime by end of year to Feb 2012......

Ben Davies' entire GATA 2011 Speech can be found here at Hinde Capital: